BKIR.L Regulatory News (BKIR)

25 Sep 2007 07:02

Bank of Ireland(Governor&Co)25 September 2007 Bank of Ireland Group Trading Statement25 September 2007 Introduction Bank of Ireland is issuing the following trading statement ahead of its closeperiod for the half-year ending 30 September 2007. Unless otherwise stated,throughout the statement comparative performance is measured against the firsthalf of our previous financial year (i.e. 6 months to 30 September 2007 versus 6months to 30 September 2006). John O'Donovan, Group Chief Financial Officer, will host a conference call at8.00am BST today, 25 September 2007. Conference call details are outlined below. Overview Underlying business trends across the Bank of Ireland remain strong as expectedand the Group continues to perform well in the half-year to 30 September 2007.Our investment strategies continue to deliver strong growth across all ourDivisions and our results will also be characterised by further efficiency gainsand continuing excellent asset quality. Our capital and funding positions remainstrong and support the continuing development of our business. Financial marketshave been significantly dislocated since early August 2007. The financial impactof this will be modest in our current half-year reporting period. Excluding the impact of non-core items(1) we expect to grow underlying EarningsPer Share (EPS) by circa 10% in the half-year to 30 September 2007 on anunderlying EPS of 73.0 cent for the half-year to 30 September 2006, and profitbefore tax (PBT) to grow by circa 12% on a similar basis(2). For the year to 31 March 2008, the out-turn is of course subject to the impactfrom further prolonged volatility in the financial markets. However, subject tothis, we re-affirm previous guidance of delivering low double digit underlyingEPS growth for the year to 31 March 2008 (from a base of 144.6 cent for the yearto 31 March 2007). Group Business momentum remains strong across the Group as we continue to drive growthfrom our core franchise and invest successfully in building our internationalbusinesses. Our disciplined approach to cost management has delivered furtherefficiency gains and as a result we anticipate a positive cost / income 'jaws'of circa 4%. Mid-single digit basis points margin attrition, excluding apositive impact of IAS 39 accounting treatment, is expected for the half-year to30 September 2007 compared to the 6 month period to 30 September 2006. Assetquality remains excellent. The annualised loan loss charge as a percentage ofaverage loans is expected to be low double digit basis points. We have no directlending exposure to the US sub-prime mortgage market, and our indirect exposureis less than €10 million. Risk weighted asset growth has moderated over thereporting period. (1) Underlying excludes the impact of non-core items: gain on disposal ofbusiness assets; gross-up for policy holder tax in the life business; investmentreturn on treasury shares held for policy holders; hedge ineffectiveness ontransition to IFRS; and cost of restructuring programme. In the 6 months to 30September 2006 the total effect of non-core items was a gain of €27m.(2) On 31 October 2006 we disposed of our 90.444% stake in Davy. Excluding theprofit contribution of Davy in the prior comparative period, we expect to growunderlying EPS by circa 13% in the half year to 30 September 2007 on anunderlying EPS of 70.9 cent for the half year to 30 September 2006 and PBT togrow by circa 15% on a similar basis. We continue to strengthen our capital position and completed thesale-and-leaseback of a second tranche of retail branches in Ireland in thehalf-year. Our capital position continues to support the planned growth for theGroup. The Group continues to fund its lending through a combination of customerdeposits and wholesale funding. The Group is confident that our funding strategysupports both our immediate business needs and our planned growth over themedium term. The Group has a well diversified funding strategy and ourprogrammes are well spread in terms of product, geography, maturity and investortype. Our strategy over the last two years has been to broaden our funding baseand steadily increase the maturity profile of our wholesale funding byincreasing the percentage of our term funding, defined as maturities over oneyear. As a result circa 80% of our loan book is funded by customer deposits and termfunding with a maturity profile greater than one year. In addition, the Groupoperates within the revised and strengthened liquidity regime introduced by theFinancial Regulator in July 2007. The Group has maintained a significant bufferover and above this regulatory requirement and this has been maintained throughthe current market volatility. Retail Ireland The economic backdrop to our activities in Ireland remains positive with strongfundamentals underpinning the delivery of an excellent performance in our retailand life businesses. The strength of our franchise and distribution channels isdriving strong volume growth across our businesses. Asset quality remainsexcellent. Business Banking and our Private Banking activities are performingvery well. Growth in our mortgage book is expected to be in line with themarket. Life Bank of Ireland Life continues to make very good progress with annual premiumequivalent (APE) sales ahead by over 25%. Sales of lump sum and regular savingsproducts have been particularly buoyant and are expected to result in stronggrowth in operating profit. Capital Markets Capital Markets is expected to deliver an excellent performance with bothCorporate Banking and Global Markets contributing strongly to this growth. Wehave continued to invest in building our international franchise in bothbusinesses. In Corporate Banking, loan growth remains strong and welldiversified. Asset quality remains excellent. In Global Markets we expect todeliver excellent profit performance with the growth in our customer businesscontributing strongly to this result. Asset Management continues to perform asexpected. UK Financial Services (UKFS) The performance of our UKFS Division is expected to be strong, with aparticularly good performance expected from Business Banking. Strong loan andresource growth, margin stability and excellent asset quality are keycontributors to this result in Business Banking. During the six months wecontinued to optimise returns in our mortgage business as rising interest ratesand intense competition put pressure on margins. Our mortgage book asset qualityremains excellent. We continue to make good progress in the development of ourjoint ventures with the UK Post Office and expect to deliver strong profitgrowth from our Consumer Financial Services activities. Interim Results Announcement Bank of Ireland Group will announce its Interim Results for the half-year to 30September 2007 on 14 November 2007. Ends. Conference call dial-in details---------------------------------Republic of Ireland free-call 1800 300 213Republic of Ireland local call 01 247 5166UK local call 0845 245 5000International +44 (0) 1452 562 716 Replay facility available until close of business 8 October 2007 - access code:12336925#--------------------------------------------------------------------------------International dial-in +44 (0) 1452 55 0000UK free call dial-in 0800 953 1533UK local call dial in 0845 245 5205USA free call dial in 1866 247 4222(available 30 minutes after the conference call) In addition, a recording of the call will be available from 11.00am (BST) on 25September 2007 on our website: www.bankofireland.ie/investor Contact details: John O'Donovan Group Chief Financial Officer +353 1 632 2054Geraldine Deighan Head of Group Investor Relations +353 1 604 3501Liam McLoughlin Director of Group Finance +353 1 604 4027Dan Loughrey Head of Group Corporate Communications +353 1 604 3833 Forward Looking StatementThis statement contains certain forward-looking statements within the meaning ofSection 21E of the US Securities Exchange Act of 1934 and Section 27A of the USSecurities Act of 1933 with respect to certain of the Bank of Ireland Group's("the Group") plans and its current goals and expectations relating to itsfuture financial condition and performance and the markets in which it operates.These forward looking statements can be identified by the fact that they do notrelate only to historical or current facts. Forward-looking statements sometimesuse words such as 'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend','plan', 'goal', 'believe', or other words of similar meaning. Examples offorward-looking statements include among others, statements regarding theGroup's future financial position, income growth, business strategy, projectedcosts, estimates of capital expenditures, and plans and objectives for futureoperations. Because such statements are inherently subject to risks anduncertainties, actual results may differ materially from those expressed orimplied by such forward-looking statements. Such risks and uncertainties includebut are not limited to risks and uncertainties relating to profitabilitytargets, prevailing interest rates, the performance of the Irish and UKeconomies and the international capital markets, the Group's ability to expandcertain of its activities, competition, the Group's ability to addressinformation technology issues and the availability of funding sources. The Bankof Ireland Group does not undertake to release publicly any revision to theseforward-looking statements to reflect events, circumstances or unanticipatedevents occurring after the date hereof. This information is provided by RNS The company news service from the London Stock Exchange